VAT rise to hit consumer sales

November 17, 2010 3:57 PM

John Lewis, one of Britain's biggest retailers, has reported a surge in sales of seasonal gifts to £77m for the week ending on Saturday, 6.8% up on the same week last year. Andy Smith, the managing director, predicted the busy tills will soon quiet after the New Year when VAT is hiked to 20%.

The increase could cost as many as 163,000 jobs, according to a warning from the British Retail Consortium. Stephen Robertson, director general of the BRC, says:
"The budget deficit is serious. It has to be tackled but proposals must be judged against the implications for jobs and growth revealed by this new information."

VAT receipts are used in part to fund our contributions to the European Union, so one lucky worker who might still be getting VAT-funded jobs is Sir Elton John, whose concerts have received a £600,000 boost from Rocket Man loving Italian officials using the EU’s ‘Cohesion Fund’ money. As Italian Northern League MEP Mario Borghezio questioned, “we want to know why this concert benefited this region".

Falling sales due to tax hikes suggest that, for all the political furore over spending cuts, increases in taxation might be a real risk to the economy, along with failing to tackle sky high deficits. Instead of increasing VAT without a madate the government should instead have tackled spending properly and made cuts to departments like International Development that were spared in the Spending Review.

John Lewis, one of Britain's biggest retailers, has reported a surge in sales of seasonal gifts to £77m for the week ending on Saturday, 6.8% up on the same week last year. Andy Smith, the managing director, predicted the busy tills will soon quiet after the New Year when VAT is hiked to 20%.

The increase could cost as many as 163,000 jobs, according to a warning from the British Retail Consortium. Stephen Robertson, director general of the BRC, says:
"The budget deficit is serious. It has to be tackled but proposals must be judged against the implications for jobs and growth revealed by this new information."

VAT receipts are used in part to fund our contributions to the European Union, so one lucky worker who might still be getting VAT-funded jobs is Sir Elton John, whose concerts have received a £600,000 boost from Rocket Man loving Italian officials using the EU’s ‘Cohesion Fund’ money. As Italian Northern League MEP Mario Borghezio questioned, “we want to know why this concert benefited this region".

Falling sales due to tax hikes suggest that, for all the political furore over spending cuts, increases in taxation might be a real risk to the economy, along with failing to tackle sky high deficits. Instead of increasing VAT without a madate the government should instead have tackled spending properly and made cuts to departments like International Development that were spared in the Spending Review.

Latest Blogs:

TaxPayers' Alliance Icon

The sugar tax and the public finances

6:00 AM 05, Dec 2016 Harry Fairhead

TaxPayers' Alliance Icon

Working for the taxman

6:00 AM 26, Nov 2016 Harry Fairhead

TaxPayers' Alliance Icon

Further thoughts on the Autumn Statement

4:56 PM 24, Nov 2016 James Price

TaxPayers' Alliance Icon

Have we had too much austerity?

10:57 AM 23, Nov 2016 Alex Wild